What Types of Startups Do VCs Want to Invest In?

Reporter Nitasha Tiku covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff?s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York.

Two types of companies VCs are praying you'll pitch them. Investor and entrepreneur Simeon Simeonov who says VCs are sick of hearing "socially-responsible-Twitter-client-running-on-fuel-cell-powered-unlocked-iPhones" pitches. Instead, they're looking for business models that solve big problems--namely, weather management and productivity enhancement. In terms of weather management, Simeonov says CEOs should consider creating weather on a macro or micro scale. "Or you could grab weather from one location, package it up and move it to a different location at a reasonable cost." As for productivity enhancement, "Chinese VCs with shady government ties" are happy to invest in products that eliminate the need for sleep. (via peHUB) We were pretty sure Simeonov was kidding, until one of the commenters linked to this story in PC World about Bill Gates applying for a patent to control the weather.

Per dollar spent, interactive marketing is more effective than advertising. Forrester Research VP Josh Bernoff breaks down the results of the company's recently released 5-year interactive marketing forecast in AdAge. In short, "advertising will change forever." During the recession, marketers learned that interactive marketing is more effective than advertising. 6 out of 10 said they would increase their budget for interactive and shift away from traditional marketing. 70 percent thought the effectiveness of channels like social media, online video, and mobile marketing would increase, which may be why digital advertising spend will grow from 12 percent in 2009 to 21 percent over the next 5 years.

Remembering the man behind WD-40. The world lost a true original earlier this month as John Barry, the man who made WD-40 a household name, passed away in La Jolla, California. Barry took a little known company called Rocket Chemical and renamed it WD-40 Co., after the company's main product, a "water displacement" fluid that apparently took the inventor 40 attempts to perfect the formula. Now a staple in almost every American household, the product has become a cure-all for everything from squeaky wheels to rusty hinges, with some devotees even claiming it helps with their arthritis. A plain-spoken Midwesterner who made his name in business by "breaking all the Harvard Business School rules," Barry insisted on answering his own phone, flying coach, and even held business meetings at Denny's. His strategy to stay focused on his one brand, despite experts telling him to diversify, proved to be his most successful business decision. As he put it, "Don't be like a blind dog in a meat house."

So you wanna be a camel milk entrepreneur. Inc.'s cover story this month tells you how to start just about any business, be it soft drinks or aerospace contracts. Today's Wall Street Journal breaks down the basics of an industry we somehow managed to miss: camel milk. A Raleigh woman named Millie Hinkle got a taste of camel milk on a trip to the United Arab Emirates and has since become obsessed with the idea of bringing the warm, salty drink (yum!) to Americans. But it hasn't been easy. Camel milk is scandalously not yet included in FDA regulations governing dairy (along with reindeer, llama, and moose milk). And camels "don't much like to be milked." Hinkle plans to parter with an established dairy in the Middle East and sell to immigrants eager for a taste of home as well as to health nuts who claim camel milk is more nutritious than cow's milk.

How miserable are we? Introducing....The Real Misery Index! The Huffington Post has developed a formula it describes as "a more accurate gauge of what is happening in the lives of millions of Americans" than the original Misery Index, created by economist Arthur Okun. The findings may surprise you. (Hint: things are worse than they seem.)

A city exclusively served by entrepreneurial grocers. Not a single chain grocery store calls Detroit home. Instead, independent operations provide the citizens their daily bread, CNN Money reports. But as the largest city in the state with the highest unemployment rate, and Detroit's independent grocery stores are facing frightening conditions. Sales fluctuate widely from the beginning of the month, when foodstamps have been freshly distributed, to the end of the month, when many stores reduce hours in order to make up for slower sales. Zaccaro's Market was a highly touted gourmet venture that only survived 10 months before shuttering its doors. "The way the community tried to come together towards the end to try and 'save' this store reminded me of something you'd see in a movie," says the store's former manager. A semi-government agency called the Detroit Economic Growth Corporation has sprung up to encourage growth and sustainability among Detroit groceries. The group's vice president says this niche can be especially difficult, "It's like any small business, but it has added complications because you're selling a highly perishable product that has very little collateral."

Twitter goes automaton. If Twitter's scope continues to expand, it will become difficult for companies to reply to each of their followers, ie. potential customers. A Colorado-based start-up hopes to ameliorate that problem, reports TechCrunch. LocalBunny, set to launch tonight, automates responses to customer tweets for a fee. If a follwer sends the company's profile a tweet containing a certain keyword, such as "hours," LocalBunny will scan its database and know to respond with something like "open until 7p.m." But LocalBunny might face a few problems at onset, one of which being that there's no way for users to quickly check which keywords a certain business is supporting. Another is the $99 per month price tag for a participating company's single Twitter account.